Welcome to the GXO Fourth Quarter and Full-Year 2024 Earnings Conference Call and Webcast. My name is Rob, and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note this conference is being recorded. Before the call begins, let me read a brief statement on behalf of the company regarding forward-looking statements, the use of non-GAAP financial measures and the company’s guidance. During this call, the company will be making certain forward-looking statements within the meaning of applicable securities law, which by their nature involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those projected in the forward-looking statements. A discussion of factors that could cause actual results to differ materially is contained in the company’s SEC filings. The forward-looking statements in the company’s earnings release or made on this call are made only as of today, and the company has no obligation to update any of these forward-looking statements except to the extent required by law. The company also may refer to certain non-GAAP financial measures as defined under applicable SEC rules during this call. Reconciliations of such non-GAAP financial measures to the most comparable GAAP measures are contained in the company’s earnings release, and the related financial tables are on its website. Unless otherwise stated, all results reported on this call are reported in United States dollars. The company will also remind you that its guidance incorporates business trends to date and what it believes today to be appropriate assumptions. The company’s results are inherently unpredictable and may be materially affected by many factors, including fluctuations in foreign exchange rates, changes in global economic conditions and consumer demand and spending, labor market and global supply chain constraints, inflationary pressures, and the various factors detailed in its filings with the SEC. It is not possible for the company to predict demand for its services, and therefore actual results could differ materially from guidance. You can find a copy of the company’s earnings release, which contains additional important information regarding forward-looking statements and non-GAAP financial measures in the Investors section on the company’s website. I’ll now turn the call over to GXO’s Chief Executive Officer, Malcolm Wilson. Mr. Wilson, you may begin.

Thank you, Rob, and good morning, everyone. I appreciate you joining us today for our fourth quarter and full-year 2024 earnings call. With me in Greenwich are Baris Oran, our Chief Financial Officer; and Kristine Kubacki, our Chief Strategy Officer. In 2024, we had some great operational highlights. We delivered record revenue and adjusted EBITDA. Notably, our adjusted EBITDA grew 30% year-over-year in the fourth quarter. We drove organic growth acceleration every quarter throughout the year. We had a stellar sales year, closed over $1 billion of new business wins for the second year in a row, grew our relationships with our customers and won a landmark $2.5 billion deal in the health sector. For the fourth quarter of 2024, we generated revenue of $3.3 billion and we delivered adjusted EBITDA of $251 million in-line with our expectations. For the full-year 2024, we generated $11.7 billion of revenue, growing 20%, of which 3% was organic. I’d like to highlight that closing the year at $11.7 billion means we’ve nearly doubled our revenue since 2020, which was the last year before we spun off from XPO. We entered 2024 expecting to deliver $760 million to $790 million of adjusted EBITDA. During the year, we updated our guidance to take into account our acquisition of Wincanton, and we’re very pleased that we delivered $815 million of adjusted EBITDA for the full-year, in-line with our expectations. 2024 was the second year in a row that GXO closed over $1 billion of new business wins. We won exciting contracts with new brands like Levi’s, LG, Puma and the German coffee chain, Tchibo. We also grew enormously with our existing customers in the year. Our land and expand strategy has been a cornerstone of our long-term partnerships, and we expanded into new geographies with more than 40 of our legacy customers, including Boeing, Guess, Michelin and Nespresso. Also in the fourth quarter, we won a major new contract, a long-term $2.5 billion total lifetime value fulfillment operation in the healthcare sector. This opportunity came through a legacy relationship we gained from our acquisition of Clipper Logistics in 2022. The Clipper deal also gave us a foothold in Germany, and I’m pleased to report that we’ve grown our revenue there by 60% year-over-year as of the end of 2024. Germany is now our fastest growing market. These accomplishments are proof positive of our successful M&A and commercial strategies. On that note about M&A, in 2024, we completed our acquisition of Wincanton. This is a growing business that will bring us expertise in key verticals like aerospace and industrials where we plan to accelerate our growth. Turning to our outlook for this year, we expect to deliver 3% to 6% organic growth with $840 million to $860 million of adjusted EBITDA for the full-year 2025. Our guidance range reflects our strong core business growth, which is netted against capacity realignment by a small number of long-term customers where we have worked together to adjust their footprints to fit their future needs. Our guidance also reflects the impact of the current FX environment and our prudent expectations on the timing of in-year integration benefits from Wincanton. We expect to have an interim update on the CMA’s regulatory review in the next week. Before I pass the mic to Baris to cover the detail behind our financial targets, I’d like to touch upon the key drivers of our growth in 2025 and beyond. First, the fundamentals of our business, the structural tailwinds of outsourcing, automation and e-commerce will continue to drive our long-term growth. Brands around the world are facing unprecedented supply chain complexity, and we’re bringing the benefit of our scale, expertise and tech-enabled solutions to help them solve their most complex problems. Second, leadership in technology continues to be a key differentiator for GXO. We’ve long been the leader in tech-enabled fulfillment. And in 2024, we made rapid progress towards our vision of the AI-enabled warehouse. I’ll ask Kristine to give you more details on that in just a moment. Third, we strengthened our sales organization in 2024, not only in our traditional verticals but in new verticals and geographies. These investments have already begun to bear fruit. We closed more than $1 billion of new business wins in 2024, including in strategic growth areas like the health sector and a range of verticals in Germany like aerospace and defense, food and beverage, and omnichannel retail. In North America, we won significant business in the technology sector, including a major contract managing data centers. Our pipeline is up 15% year-over-year as of the end of the fourth quarter and our pipeline in the Americas is up 20%. This momentum will continue to drive our long-term growth. With that, I’ll hand you over to Baris, who will walk you through the financials and our guidance.

Good morning, everyone. Before reviewing the numbers, I would like to particularly highlight the strong sales year we have had. First, as Malcolm mentioned, we won more than $1 billion of new business in 2024 with an average contract length above our long-term average of five years, including a massive win in the health sector, which is a target growth vertical for us. Second, we noted last quarter that demand for new e-commerce facilities was growing and we are pleased to note that we finished the year with about 60% more new business won in e-commerce year-over-year. And third, we finished the year with a robust pipeline giving us confidence in our long-term growth. For the full-year of 2024, we generated revenue of $11.7 billion growing 20%, of which 3% was organic. Our organic revenue growth accelerated sequentially throughout the year, led by our omnichannel retail and consumer goods business. We delivered adjusted EBITDA of $815 million, growing 10%. Our adjusted EBITDA margin was 7% for the full-year. Our adjusted diluted earnings per share was $2.80, up from $2.59 for the full-year of 2023. Our operating income for the full-year 2024 was $218 million, and we delivered net income of $138 million. In the fourth quarter, we generated revenue of $3.3 billion, growing 25% year-over-year. We delivered adjusted EBITDA of $251 million, growing 30% year-over-year. Our adjusted diluted earnings per share was $1 in the fourth quarter, up from $0.70 in the fourth quarter of 2023. Our fourth-quarter operating income was $101 million, growing 16% year-over-year, and net income was $100 million, growing 37% year-over-year. Our operating return on invested capital at 46% remains well above our long-term target. In 2024, we again converted more than 30% of our adjusted EBITDA to free cash flow; we delivered an outstanding $127 million of free cash flow in the fourth quarter. We remain laser-focused on capital effectiveness and continue to prioritize investments in technologies and services that drive the greatest return for our customers. Our balance sheet continues to strengthen. Our net leverage was 2.7 times as of the end of the fourth quarter, down from the peak of 3.1 times following the acquisition of Wincanton in the second quarter. As we focus on deleveraging and integration throughout 2025, M&A is not on our short-term agenda. Now, turning to our guidance. For the full-year 2025, we expect to deliver organic revenue growth of 3% to 6%. We anticipate a sequential acceleration of organic growth throughout the year, similar to what we have seen in 2024, given the phasing of new business wins and the customer capacity realignment impacting the first quarter. Our organic growth trajectory is underpinned by our strong sales performance, where we closed more than $1 billion of new business wins for the second year in a row. We have $627 million of incremental revenue booked for 2025, which is 10% higher than where we were at this point last year. And at the same time, our pipeline has grown 15% year-over-year as of the end of 2024. Our investments in our sales organization are creating the momentum for our long-term growth. We also expect to deliver $840 million to $860 million of adjusted EBITDA. As Malcolm highlighted, our guidance range reflects sequentially increasing adjusted EBITDA throughout the year. This improvement will be driven primarily by the maturity ramp-up of new startups, progressively offsetting the impact of a few customer capacity realignments in the first quarter. Double-clicking on the realignments. Post-peak season, we have worked with a few of our large customers to realign their footprints to fit their future needs. You will note from our revenue guidance that we have been able to almost completely offset this rationalization impact through new wins. But due to the maturity curve of startups, we’ll see improved profitability throughout the year. This means that these realignments will predominantly affect our adjusted EBITDA in the first quarter. We expect our full-year adjusted diluted earnings per share to be in the range of $2.40 to $2.60 reflecting our guidance on adjusted EBITDA and an increase in our effective tax rate in 2025. At the midpoint of our range, we expect to convert about 30% of our adjusted EBITDA into free cash flow, in line with our historical performance. We expect our growth to continue to accelerate sequentially throughout 2025. We are working on a number of measures to improve our operating profitability, including continuous improvement measures at the site level and when we begin the integration of Wincanton, our results will accelerate faster. I’ll pass the mic to Kristine. Kristine, over to you.

Thanks, Baris. Good morning, everyone. We’re pleased with our results for the full-year 2024. As Malcolm and Baris mentioned, the investments we’ve made in our business are driving great results. Today, I’d like to update you on the progress we’re making toward our vision of an AI-enabled warehouse and how our strategy for 2025 will support our future growth. As we discussed last quarter, we began piloting our first proprietary AI applications in select warehouses across the U.S. last year. We’ve now launched 22 instances of our proprietary AI apps across three key warehouse functions: proactive replenishment, SKU dimensioning, and order routing. Our tools have delivered exciting results over the past few months, including productivity improvements of three to four times in stock replenishments for a major sporting goods retailer, a 50% improvement in order allocation plus a 22% improvement in carton fill rate, which drove efficiency and decreased transportation costs for an omnichannel retailer and a record-setting inbound process for 35,000 SKUs as we prepared to launch a new e-commerce operation. We have a number of other modules in development, including volume prediction, slotting, and pick optimization. GXO’s strategy for AI within the four walls of the warehouse focuses on improving productivity and debottlenecking the flow of product. Our 2025 roadmap prioritizes layering additional modules on-site where we’re already live with AI to compound the impacts of these powerful tools. We run mega sites for household name brands all over the world, and we’re focused on scaling the impact of our AI across multiple warehouse processes in parallel. We’re excited about this technology and the tangible results it’s driving. We’re receiving positive customer feedback on how our AI is transforming their fulfillment operations, and we look forward to formally launching this product as a key part of our commercial strategy to supercharge our growth. And with that, I’ll pass it back to Malcolm.

Thanks, Kristine. We’ve delivered a record-setting year, advanced our commercial and tech strategies, and built momentum to accelerate our growth in 2025 and beyond. I’d also like to share our pride that GXO received numerous awards in 2024, from being recognized as the Number 1 logistics provider on Newsweek’s list of America’s most reliable companies to receiving accolades for our innovative use of AI and awards for our partnership with customers like Nestle and Whirlpool. We greatly appreciate the industry’s recognition of our outstanding performance and innovation. And before we close, I’d like to thank our employees for their excellent performance during peak and throughout the whole of 2024. Our customer satisfaction scores reached an all-time high as of the end of 2024, and it’s the hard work and dedication of our team members that enables us to delight our customers day-in and day-out. We are excited about our growth trajectory as we focus on delivering the best possible service to our customers and generating strong returns for our shareholders. With that, we’ll hand the mic back to Rob, for Q&A.

Thank you. And our first question comes from Stephanie Moore with Jefferies. Please go ahead with your question.

Hi, good morning. This is Joe Hafling on for Stephanie Moore. Thank you so much for taking our questions and thanks for the informative slide deck and all the details you provided in the prepared remarks. Can we unpack a little bit more about what’s happening in the first quarter with that $15 million EBITDA hit? It just seems like a pretty heavy hit. Baris, you mentioned it was only a couple of customers. So, could we kind of maybe talk about exactly what’s going on? Are these customers just really a lot more profitable than the new business that you’re bringing in? Or is there a cost lag between when these customers are realigning their capacity and you’re backfilling the sites? And maybe my follow-up to that would be to the extent that you have some customers leaving some sites or reducing their footprint, have you already found customers or tenants to kind of take over those new sites? Thank you.

Hi, it’s Baris here. Good morning. We expect low-single-digit organic revenue growth in Q1 and we expect to deliver around $155 million of adjusted EBITDA at the midpoint of our range. The difference compared to full-year bridge is that we have a larger impact from customer capacity alignments and new site implementations. We have positive net wins from a revenue standpoint in Q1, and capacity realignments are primarily in mature sites, and our startups take time to reach the glide path. You would recall that we had a similar short-term impact from new startups in 2022 and how this was resolved quickly throughout the year. Now, coming back to the second part of your question, there is a handful of contracts that have driven this impact. These are one-off in nature. Let me give you some detail. First, there is a customer that we have seen a relatively large mature site exit. We have continued to win new business from this customer and we’ll have four sites going live throughout 2025. Number 2, one of our automated site customers have realigned capacity in their network, and given the prime location of operations, we have held the lease and already secured another customer, which will contribute profits in the second half of 2025. Number 3, another long-standing mature site customer has realigned their network because of lower consumer volumes. They remain a good customer for GXO. And on top, as we’ve highlighted, we face some FX and pension headwind about $20 million or so in 2025 versus 2024. And when you add those back, the underlying performance is quite helpful.

Got it. Thanks so much. If I could just maybe ask one more question. Is there any confidence that this is not a structural issue and that this really is just kind of a one-off? I guess what would be stopping this as being just a continued trend throughout 2024? Thanks.

Network realignment is a short-term impact. They are not lost customers. In fact, as I highlighted, we are opening new sites for one of these customers. And for the other sites, we are reallocating it to another customer. The productivity of course will ramp up. As we have highlighted in 2022, we had a similar short-term impact from the new startups, and you have seen how this was resolved quickly throughout the year. Our history speaks for itself.

Thanks very much. Good morning. I’m curious to hear about how transactional volume with existing customers has been trending. I’m curious how it looked in the fourth quarter. I believe it was a progressive improvement year-over-year versus each of the preceding quarters of 2024. How should we expect that to look in 2025? And I’m not sure if this development with these two or three customers affects that, maybe an answer with or without that involved for 2025? Thanks.

Hey, Scott. Hi, it’s Malcolm. Let me give you a bit of an overview on volumes generally across the different regions. And then, probably there’s a little bit more detail I’ll ask Baris to comment on. When we think about the fourth quarter, definitely, our Continental Europe business was showing the fastest growth, and that growth has really carried on into 2025. We mentioned earlier, we are seeing very, very good output of sales pipeline wins in new markets like Germany. So really, Continental Europe going from strength to strength. In the U.K., since our last call and probably really second half of the last quarter and where we are now, what we have seen is retail environment has softened a little bit. And that’s really a consequence of the recent government budget. Many of our customers are still working out the implications of the higher employment tax rates. They’re a little bit cautious about the go-forward and those tax rates will start to impact in April. So, I would say our U.K. business softened a little bit but is still very vibrant. And obviously, you heard earlier our sales pipeline is very strong, including a very, very big win in a new vertical, healthcare. Here in the U.S., definitely we’ve seen a pickup in mood from the consumer-focused business, and we can see that reflected in our stronger sales pipeline. We did very well in the last quarter when it comes to volumes, and we expect that to progress forward. Notwithstanding the point that Baris has just made where momentarily in Quarter 1, you do see this impact of us realigning some customer volumes on some of our big customers, very small number, but it’s a point for our Quarter 1. It’s too early to gauge what impact tariffs will have on our U.S. business, but really generally, our business is a domestic business. We don’t think there’s a likelihood of any material impacts feeding through in that regard. And also, as we highlighted in Quarter 3, we’ve definitely seen a pickup in our e-commerce and omnichannel commercial activities. So again, just to highlight, great news for big new wins, great news for growth in Germany. The strategy that we’ve got is really definitely working in terms of pushing into new verticals. And that’s good because a lot of these new verticals, they’re less sensitive to consumer behavior. And that really builds to the strength of the resilience of the business. I’m sure all of these factors are contributing to this 15% year-over-year growth that we’re seeing in our sales pipeline. Baris, maybe you can add a little bit more detail on percentages?

Sure, Malcolm. We have seen sequential improvement in our organic revenue growth in 2024, and we do expect sequential improvement in 2025. Within that, in Q4, our underlying customer volumes were slightly positive in the fourth quarter. That’s less than 1% positive. And when we look into the entire year of 2025, we expect underlying customer volumes to be flattish for the entire 2025.

Great. Thanks for that, guys. Appreciate the geographic and end-market discussion. I guess I’ll do my follow-up with regard to that healthcare win. It sounds like it came from a relationship and I know that’s a vertical you’ve been looking to penetrate. Could you elaborate on how quickly now with that win that might help you garner more business in healthcare? Is this something that you think you can penetrate rapidly? Or I believe you said in the past it would be helpful via acquisition, which I know is on hold while Wincanton is occurring. Just curious your ability to ramp healthcare with this new win organically and any incremental detail you can share about this new contract? Thanks.

Yes. Scott, it’s Malcolm here again. Look, it’s a milestone win. It’s a huge piece of business that we anticipate starting in the second half of this year. We are under a very strict confidentiality agreement, so I can’t mention the name, but I think it’s fair to say we’re very proud to be partnering with this new customer. Already, I can see that in our U.K. sales pipeline and a lot of inquiries already coming in Continental Europe, we have a very large catchment of interested customers who will come in really on the back of this very prestigious win that really opens up a huge range of services that we’re providing for the customers. So in that regard, very, very positive outlook for the way forward in healthcare. And that’s a really brand new vertical for us that we’re achieving without actually having to undertake any M&A. It’s a homegrown organic huge big opportunity for us. On Wincanton, the business is trading very, very well, but it’s clear for us that we can achieve with that what we’ve achieved in healthcare. Healthcare really came from embryonic business relationships that came out of the Clipper M&A. It was one of the things we saw in Clipper when we were doing that deal. This vertical plus the business that existed in Germany and that also has proven to be a huge success. In Wincanton, the highlights that we see in new verticals, it’s the industrial sector, defense, aerospace, I think we will achieve the same successes. It might take us a year, two years following integration. That’s normal for topline synergy benefits. You’re seeing that right now. It’s a couple of years since Clipper. But we’re pretty confident we’ll see the same levels of successes coming out of the Wincanton deal.

Great. Thank you.

Hey, thanks. Good morning, guys. I guess just sort of conceptually on some of these customer losses or adjustments, I guess there is maybe some expectation that you guys would have been a bit more insulated to this. And so maybe the question is, are there aspects in the contract that would have allowed some sort of either penalty for closing or leaving a contract earlier or some other sort of mitigating factors included in it? And I guess also, as you think about sort of the go-forward period, was this one a unique dynamic where at the end of the fourth quarter you had a higher number than normal contracts coming up for renewal? So, I guess we’ve always thought about a relatively high retention rate probably because the portfolio was relatively balanced in terms of renewal risk, but kind of curious about how we should think about that going forward?

Chris, hi, it’s Malcolm here. Nice to hear from you. Chris, it’s very much a kind of one-off event. As Baris mentioned, we did experience something similar way back in 2022. It just happens that we’ve got two or three large customers, very strategic customers for us. We have business with these customers on multiple geographies. Relationships very, very strong. On one hand, we see a need we identify to the customer. We’re always out to optimize the business that we have with customers for the long run. And when we can see clearly an opportunity to do things differently that will bring greater efficiency, we wouldn’t be doing our job if we didn’t identify that and work with the customer to actually make that happen. And that’s pretty much what’s happened here. We have good visibility on those kinds of things. We were able to influence it. We are not in any way financially damaged as a consequence because clearly our contracts are back-to-back. That’s a feature of our company. That’s one of the things that make our earnings relatively highly predictable as you’ve seen over the years. And in this instance, as Baris mentioned, it’s really a consequence of the move of relatively mature business coming to an end, happens to be a number of incidents in one quarter and then new business starting up very quickly. But as you’ve heard us mention in the past, there is generally a small lag when we start new business. We don’t achieve mature contract profitability. Generally, it takes about six months for us to reach those levels, and that’s really what you’re seeing. And you’re seeing that primarily focused in Q1. When you look at the phasing of the rest of our business, the rest of this year is quite a normal phasing. But clearly, it’s having an impact in our Quarter 1 numbers, and it’s one of the reasons why our guide for the year looks a little lower than probably people might have expected.

Okay. All right. That’s helpful. I appreciate it. And then on the free cash flow, so I noticed that the guidance, I think the conversion rate is 25% to 35%. I think in the past, it’s been 30% to 40%. So, can you walk us through sort of what’s happening from a cash perspective? Are there some different dynamics of the book of business that you have today? Or are there some other factors we should be considering?

Hi, Chris. It’s Baris here. Our free cash flow for Q4 was $127 million and $251 million for 2024. We delivered around slightly over 30% free cash flow conversion. In 2025, we targeted a similar 25% to 35% conversion, 30 points at the mid-to-mid low range, a similar outcome to what we have delivered in 2024. Prior to our 2024 free cash flow guidance, we did not contemplate the Wincanton acquisition, and we delivered on the lower end of this range. This was due to the funding and integration and final payments of the transaction cost that in aggregate came around $70 million for the year. And we are generating strong underlying cash flow, and this is in line with our history.

Okay. So, Wincanton is a slightly different cash profile as we think about 2025 or there are still some of these integration or sort of financing costs that impact free cash for 2025?

There will be some integration costs. The transaction has not been fully gone through the CMA approval. So, there are some transaction costs that are happening in 2025. So hence, our guide for the midpoint 30% free cash flow range in 2025.

Good morning, Malcolm, Baris, Kristine. I actually want to see if you could maybe give us a little bit of color on the customer pipeline and whether the dynamics there have changed, whether there’s maybe like a higher sense of urgency to get things done or that there’s more hesitation because of some of the rate tariff discussions, etc. just to kind of get what your customers are seeing in the pipeline?

Yes. Kevin, it’s Malcolm here again. Look, very high level. I think our pipeline is up 15% year-over-year. We’re running with a very strong pipeline at the moment about $2.3 billion. And I do want to say I should have called it out earlier, we’re very pleased with how Wincanton business is trading. It really contributed very well to our fourth quarter results. But something we don’t broadcast is we don’t actually incorporate the Wincanton sales pipeline in our numbers. We’re actually technically not allowed to because of the way the CMA process works. But you should have a knowledge of that. But, actually when we talk about our sales pipeline, it really will be very, very strong once we start that integration. In all the different territories, we’re really seeing a lot of activities. Existing customers are very busy, got lots of new projects. I mentioned earlier, definitely we’ve seen a resurgence of e-fulfillment projects, e-commerce activities coming back in every region that we’re working in. The investments that we made at the start of 2024 are definitely showing big success. And what I mean by that is in 2024, we went through an exercise where we really upgraded some of our sales resources. You can see that in the improvement in sales pipeline, but also we added sales resources in new verticals. And what’s very pleasing to see right now is we’re winning business in new verticals. And generally, the verticals that we’ve been targeting are the ones that give us less sensitivity to the consumer. And that’s good for this company because I think we have to recognize at the point of this spin, we were our business was probably about 50% really directly focused on the consumer environment. And that can be good when consumers are running well, but also it can flow through when consumer sentiment is a bit less. What we’re doing right now I think will make the company a lot more resilient.

I appreciate all the color on that. And then, maybe we could kind of venture into competitive dynamics. Has there been we’ve heard of some resurgence from other competitors and growth. And I was wondering, are you guys seeing that as well? And then whether there is even a higher sense of green shoots coming from warehousing?

Kevin, I would say we’re not seeing any different environment today than we were maybe 12 months ago when we think about the competitive landscape. There’s a tiny number of companies that are capable of providing services on a global basis at scale as GXO can do. Those companies were there a year ago, two years ago, they’re there today, and they’re very healthy competitors to us. We like those companies. They’re very responsible in the way in which they approach customers and their pricing strategies. So, that’s a good catchment of people that we tend to see when we are working with customers. And then likewise, there’s a range of like what we would term local heroes, small companies that frankly focus towards the kind of customers that are really less our kind of customers, the sort of local regional type of players. But overall, I think GXO, we’re just really in a very good position. The work in particular that our teams have done through ‘24 in driving more and more technology, AI in particular now, into our business is really helping tremendously to differentiate us. And I’ve got no doubt it’s one of the reasons we’re winning business.

Thank you, Malcolm. I certainly hit on quite a few of opportunities and real-world accomplishments that we’ve made over this year. We’re certainly very early on in our proprietary AI development. We’re certainly, we’re seeing real-world results already today, and I highlighted some of those modules in my prepared comments. But certainly, we’re seeing fantastic results in terms of productivity increases of three to four times in specific parts of the processes. And this is really versus a 20% improvement on your normal everyday continuous improvement type projects. So, really a leap forward in terms of the types of opportunities and outcomes that we’re able to deliver for our customers and certainly really this continues to drive our GXO differentiation. As we look forward to our strategy in 2025, it’s to continue to roll out these AI modules across our warehouses. And we’re going to be layering in as many proprietary AI modules in as many possible sites, and we’re really already live with AI today. So, we’re really looking forward to harnessing this powerful effect. Again, this will really continue to drive GXO’s differentiation with our customers.

Thanks. Hey, good morning. This is Uday on for Jason Seidl. I guess just a clarification on the customer realignments, maybe following up on prior questions. I understand the one-off nature in Q1 and the contracts kind of reaching maturity, but how prominent was the volume outlook itself as a consideration for customers in doing this revaluation? I guess I’m trying to understand like if the contract renewal outcome is linked to the near-term macro outlook in any way. Like any framing from that perspective would be helpful.

Hi, Uday. This is Baris here. As I mentioned, if I look into those customers, they were driven primarily by the consumer volumes that they had. In one customer, we have opened other sites in other locations. And in one site, it was primarily looking into their peak volumes and after the peak volume, they looked into their 2025 forecast. And, it was a prime location for us and we held on to the lease and we already secured another customer. So, this is going to be a net beneficiary for us. And the third one is that, customer that we have a very, very long relationship with and mature side, but because of the lower volumes, they decided to realign their network and they remain a good customer for GXO. So overall, I’m not as concerned. The underlying volumes of our customers in existing sites are very low-single-digits positive in Q4 and we expect that to be flattish in 2025.

All right. Thanks, Baris. That’s helpful. And I guess as my follow-up, Malcolm, you mentioned kind of the de minimis changes might be a positive if I guess volume flows into more warehousing as shippers kind of consolidate their freight. I mean, is that something that you’re already seeing take place preemptively? Or is this something that you anticipate just given the dynamics? Any color there?

I think we’re seeing inquiries coming in now to our sales team. Obviously, it’s a North American issue. And we don’t today work with customers who undertake that. So, from our perspective, we see that as a net positive impact. We’re pretty confident that a lot of those customers will ultimately need to convert existing supply chains to have a presence here instead of what they are doing today. But I think it’s definitely something that we expect to see some benefits for during the course of 2025. Thanks, Rob. And again, thanks for hosting our call today. We really appreciate that. In the fourth quarter, we delivered a further sequential improvement in organic revenue growth and the year-over-year improvement in our adjusted EBITDA margins, leading to a 30% year-over-year adjusted EBITDA growth. We’re absolutely delighted to be showing some fantastic growth in the healthcare sector with our largest ever win, and also in Germany, which is now our fastest growing individual geography market. The acquisition of Clipper has really helped us to turbocharge our opportunities in new verticals and the new region in Germany, no doubt whatsoever. We look forward to doing exactly the same, likewise with Wincanton in the industrial verticals, defense and aerospace, particularly in Europe, where we can see already a huge opportunity. Customers are looking to GXO to help them successfully navigate these times, the times that we’re in. Leadership in using automation technology and efficiency, the benefits that we’re now starting to see coming through deployment of AI, it’s becoming of a growing importance. And, we’re really told from our customers just how much they value that and how much they see that being a differentiator for GXO. So with that, I’d like to wish everybody a great rest of the day, and I’d like to thank everybody for joining us on our call. With that, let’s close the call.

Thank you. Ladies and gentlemen, this concludes today’s teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.